Read Walpole's The State of London Luxury report 2023

Walpole, the sector body for British luxury brands, has published its inaugural State of London Luxury report in partnership with Cadogan. The comprehensive report examines London's status as a global luxury capital, analyses the drivers behind its success, explores opportunities for future growth, and identifies policy measures necessary to unlock its potential, including the reinstatement of a tax-free shopping scheme for international visitors.

The State of London Luxury report, set to be published annually, takes an in-depth look at the unique ecosystem encompassing luxury retail, hospitality, culture, infrastructure, and the presence of affluent customers, both residents and visitors. It serves as a barometer of London's position as a world-leading luxury goods market, highlighting current trends that define the city's luxury landscape, such as hyper-localisation and luxury villages. These elements underpin London's ever evolving yet enduring appeal to luxury brands and discerning customers.

Employing the framework of V.I.T.A.L., the report examines London's performance as a luxury hub, highlighting its crucial role for luxury brands and its inherent energy to drive prosperity. Forecasts estimate that the luxury sector in London could reach a value of £28-30 billion by 2024, reinforcing the significant contribution of a thriving London to luxury manufacturers and suppliers across the UK all of whom generate employment opportunities throughout the length and breadth of the country.

The 2023 Walpole Luxury London Survey, exclusively featured in the report outlines the current perceptions among respondents regarding London's status as a global luxury hub, the future of high-end retail, and their confidence levels. Encouragingly, 71% of respondents express positivity about the prospects for their business at present, a sentiment that rises to 81% over the next 2-3 years. This optimism is echoed by Savills Luxury City Fundamentals ranking 2022, which positions London second only to New York when comparing size of retail market, international visitor appeal, affluence and growth potential.  

London's appeal is further underscored by its status as the prime destination for high-end tourism, with 50% of UK international visitors choosing the capital as their primary stop pre-pandemic. Furthermore, high-end tourists in London outspend mass tourists by 14 times per trip and double that of high-end visitors to other European cities. Catering to this burgeoning demand, London will see the opening of 12 new 5-star hotels between 2022 and 2025, surpassing any other period of hotel development in the city with new entrants including The Peninsula, Raffles, and Costes.

With the UK's high-end tourist market valued at £35 billion, London's status as a top global destination is indisputable thanks to its unparalleled visitor attractions including 17 out of 25 of the most visited tourist landmarks in the UK. Culturally, the city boasts six Historic Royal Palaces, four UNESCO World Heritage Sites, 215 museums (including 11 national museums), 857 art galleries, and a multitude of other annual cultural and sporting events. These offerings contribute to longer dwell times and increased spending by luxury consumers.

The State of London Luxury report also examines the interrelated art and luxury sectors, and London’s influence in the art world is critical to the marketplace. Luxury brands continually draw on art for inspiration, philosophy and partnerships. That inspiration is fed by direct investment in art and culture, with some luxury brands allocating 0.5% to 1% of their annual revenues toward artistic and cultural patronage.

The vibrancy in hospitality is mirrored in new luxury store openings. Whilst two Chinese cities outrank London in volume, data from Savills demonstrates that London leads the world with the highest number of new store openings between 2019-2022.

The findings from Walpole’s London Luxury Survey shows that 82% of respondents believe that the blend of well-known luxury brands and local British luxury icons is a major contributor to the London’s distinctiveness in the luxury landscape. Renowned luxury retail districts like Knightsbridge, Chelsea, and Mayfair have attained global acclaim and 69% of participants ranked Bond Street among the world's top three luxury streets. However, it is London's affluent ‘villages’ including Connaught Village, Marylebone Village, Little Venice, and Shoreditch offering hyper-localisation, unique character and trend-led retail and dining experiences that can’t be found anywhere else in the world.

The presence of these affluent villages, along with the increasingly important wealthy local residents, has positioned London as a global leader in growth and investment. Currently, London has the highest number of High Net Worth Individuals (HNWIs) compared to any other city worldwide. According to the London Luxury Survey, 61% of respondents identified understanding and profiling local residents as a key success criterion for their businesses and luxury brands are recognising the need to provide added value services such as personal shopping, styling, direct delivery, and personalised in-home tailoring and fitting to enhance the customer experience.

Investments in the public realm and placemaking initiatives, exemplified by Cadogan's Sloane Street and Pavilion Road developments, enhances the retail and residential environment for both affluent visitors and residents. And with over a third HNWIs who want to buy another property looking to purchase in the UK, the potential for attracting luxury customers is set to increase further.

This report not only highlights the overwhelming positive resilience of London's post-pandemic growth but also acknowledges the opportunities to unlock future growth from a policy perspective. One significant opportunity lies in the reinstatement of a tax-free shopping scheme for international tourists the loss of which is a drag on both London’s and the UK’s economic performance. With a different policy approach from government, it would be possible to further optimise its attractiveness as a city to visitors, businesses and investors alike.

Helen Brocklebank, CEO, Walpole, said: "12 new five-star hotels, the highest number of new store openings outside China, and 81% of luxury retailers saying they feel positive about prospects for their business over the next few years demonstrates that the luxury scene in London is vital, vibrant and brimming with health and confidence. If a next generation tax-free shopping scheme could be introduced, London’s status as the world’s number one luxury city would be guaranteed."

Hugh Seaborn, CEO, Cadogan added: "Across Chelsea and Knightsbridge, we have London’s highest concentration of luxury brands and are delighted to partner with Walpole on this annual barometer of our capital’s standing, using insight from our community and way beyond to create a snapshot of sentiment and better understand the trends shaping tomorrow’s neighbourhoods."

Paul Scully, Minister for London commented: "Walpole's excellent State of London Luxury report clearly demonstrates that there is nothing like travelling to and around this great city. Brand makers and policy makers alike need to continue to work in lockstep to ensure London remains the best city in the world in which to live, work and play."

The State of London Luxury Report indicates the vast stabilisation of the luxury sector in the UK post-pandemic. London is still a leading global luxury city and the best city in which to grow a luxury brand.